Global M&A Trends Survey Report (2022-2023)

Capstone Partners & IMAP Survey Predicts Healthy Forecasts for Global Middle Market M&A in 2023

Capstone Partners and IMAP have released its 2022-2023 Global M&A Trends Survey Report, with insights from M&A advisors across the world. This report combines Capstone’s in-depth investment banking knowledge with proprietary data obtained from 133 participating IMAP M&A advisors across 37 countries. Capstone and IMAP surveyed M&A advisors between October 25, 2022, and November 15, 2022. The full report, available for download below, provides insight into M&A market activity throughout 2022 and forecasts for deal making conditions in 2023, with sections including:

1. M&A Market Conditions
2. M&A Valuation Dynamics
3. Sell-Side M&A Considerations
4. Global Economic Impacts

The report also reveals data by industry and region, highlighting significant variances.

Key Findings:

Strong M&A Volume Forecasts for 2023

Despite current economic headwinds, advisors remain fairly optimistic regarding M&A volume growth for 2023, as 28.6% of total advisors survey expect deal flow to increase, demonstrating continued confidence in the M&A market amid global economic turmoil. The lion’s share of advisors (37.6%) have forecasted transaction volume will experience a moderate decrease in 2023, with only 5.3% predicting a significant decline.

Advisors’ forecasts for 2023 M&A volume growth are heavily dependent on their operating region, with 72.7% of advisors in Asia expecting transaction volume to increase, followed by Latin America (51.8%) and North America (31.5%). Only 12.7% of advisors in Europe, the Middle East, & Africa (EMEA) forecasted increases in deal volume, with many citing market volatility and geopolitical tensions such as the war in Ukraine as the main hurdles to deal flow.

M&A Purchase Multiples Normalized in 2022, Further Moderation Anticipated

Rising inflation and interest rates placed downward pressure on M&A purchase multiples in 2022, with 60.9% of total advisors surveyed reporting a decline in M&A multiples compared to 2021. However, recession-resilient industries including Technology, Media & Telecom (TMT), Healthcare, and FinTech & Services continued to draw healthy multiples. Nearly two-thirds of advisors indicated that participants in the TMT industry received the highest M&A valuations in 2022, followed by the Healthcare industry (51.9%).

M&A purchase multiples are expected to further moderate in 2023, with 46.6% of advisors surveyed anticipating a modest decline in valuations compared to 2022. In addition, 38.3% of advisors projected M&A multiples will experience little to no change in 2023 from the prior year. Advisors showcased significant consistency regarding 2023 industry valuation forecasts, with the TMT, Healthcare, and FinTech & Services industries most likely to receive the highest M&A valuations, mirroring pricing trends reported in 2022.

Specialization is Most Critical Factor in Advisor Selection

The sale of a business is a momentous decision—often the culmination of decades of hard work and sacrifice. Realizing a liquidity event to monetize the value of a company can be a life-changing occasion for a business owner and their family. Many business owners have a substantial portion of their wealth tied up in their business, making achieving an optimal exit all the more meaningful. There are several critical factors to consider when selecting a M&A advisor to ensure a successful transaction. As noted by 78.9% of advisors surveyed, detailed knowledge and a track record of closed deals in a specific industry or sector is the most important factor to consider.

Industry Knowledge and Deal Execution Pertinent in Advisor Selection

Inflation Most Impacted Clients' Operations in 2022

Global inflation peaked at near double-digit rates in 2022, with central banks hiking interest rates to offset the elevated pricing environment. On a global basis, advisors ranked inflation as the most impactful factor on their clients’ business operations in 2022. At the regional level, advisors in each geography also ranked inflation as the most impactful, with the exception of Asia-based advisors who identified raw material procurement as most impactful. Asian supply chains have been slow to recover due to congested trade routes, extensive shipping backlogs, and reliance on third parties for critical input materials and components.

Inflation Continued to Afflict Clients on a Global Scale

North America and EMEA Most Likely to Face Recession

Among all advisors surveyed, 78.2% forecasted that a recession in their operating country would be very or somewhat likely over the next year. At the regional level, the North American and EMEA markets are most likely to face a recession in 2023, as noted by 92.1% and 85.8% of advisors, respectively. Asia-based advisors have been the most optimistic regarding the likelihood of a recession, as 45.5% of advisors in this region predict an oncoming recession to be very or somewhat unlikely and only 27.3% expect a recession to be likely.

Request the Full 2022-2023 Global M&A Trends Survey Report Publication

Our full report publication includes an in-depth analysis broken down by industry and region and is available in PDF format. To request the report, please complete the form below and a copy will be immediately emailed to you.